Life Insurance: Fall Brings New Life to the French People's Favorite Investment
In September, net inflows into life insurance reached 2.5 billion euros, according to France Assureurs, compared with 782 million euros in August and 1.9 billion euros in July. A year earlier, in September 2023, life insurance had recorded net inflows of just 30 million euros. This marks the ninth consecutive month of positive net inflows for life insurance.
The results for September 2024 are exceptional compared to previous years. In fact, September is generally a difficult month for life insurance. Since 1997, there have been four months of net outflows in September: 2011 (–1.8 billion euros), 2012 (–3.08 billion euros), 2016 (–553 million euros), and 2020 (–246 million euros). The average net inflow for the ninth month of the year has not exceeded 700 million euros over the past ten years. In the first nine months, net inflows for life insurance totaled 21.3 billion euros, a figure close to that of 2023, which was 20.5 billion euros.
Gross premiums exceed 12 billion euros in September
In September, life insurance premiums reached 12.3 billion euros, compared with 9.7 billion euros in August. In September 2023, premiums totaled 11.2 billion euros. Households significantly increased their payments upon returning from vacation. Over the first nine months of the year, premiums totaled 129.5 billion euros, a 15% increase year-over-year. In September, 8.2 billion euros were paid into euro-denominated funds, compared with 6.5 billion euros in August.
Decline in Benefits
Households contributed more to their life insurance policies while making fewer policy surrenders. Payouts totaled 9.8 billion euros, down 12% year-over-year, with a 13% decrease for euro-denominated funds and a 10% decrease for unit-linked funds. Over the first nine months of the year, redemptions reached 108.1 billion euros, down 3.9 billion euros. Households are making fewer redemptions from their euro-denominated funds than in 2023. This shift in behavior can be attributed to higher returns on this type of investment, as insurers have made efforts to attract customers by offering preferential rates. Furthermore, the decline in term deposit rates has made life insurance more competitive.
Euro-denominated funds are rebounding
Contributions to euro-denominated funds rose by 18% in September, and for the first time since April, net inflows for this investment vehicle were positive, totaling 877 million euros.
Unit-Linked Funds Less Dynamic
Unit-linked funds (ULFs) posted weaker growth than euro-denominated funds in September, due to the Paris stock market’s lackluster performance. ULF subscriptions totaled 4.1 billion euros. Unit-linked funds accounted for only 33% of gross inflows in September, compared with 37% year-to-date and 40% in 2023. Net inflows into unit-linked funds totaled 1.6 billion euros in September.
Life Insurance Aims to Win Back Customers
Facing competition from regulated savings accounts and time deposits in both 2022 and 2023, the life insurance sector struggled but never collapsed. It remains by far the leading savings product in France, with assets under management totaling 1,977 billion euros as of September. Since the start of the year, improved returns on euro-denominated funds have helped make the primary investment vehicle for French households more attractive. The end of the inflationary spell has led to lower key interest rates set by central banks, which in turn has driven down rates on time deposits. In 2025, rates on regulated savings accounts are also expected to decline. Furthermore, the decline in inflation is encouraging households to shift toward long-term savings. Having accumulated substantial precautionary savings since 2020, households can now make investment decisions in favor of life insurance or the Retirement Savings Plan (PER). In September, the PER recorded a 20% year-over-year increase in new contributions. The outstanding balance of insurance-based PERs now stands at nearly 90 billion euros (87.1 billion euros).
The end of the year should remain favorable for life insurance, especially since the real estate market remains sluggish. Households are expected to increase their long-term savings. Political uncertainties do not seem, for the moment, to be deterring them from saving—quite the contrary. The rebound in euro-denominated funds nonetheless reflects their desire to protect themselves against the vagaries of the financial markets.
(Source: Cercle de l'épargne)
